UNIVERSITY  OF  ILLINOIS 
LIBRARY 


Class 

33ft.  S 


Book  Volume 


My  08-1 5M 


THE  ROAD  TO  SAFETY 


A 


LETTER  TO  GENERAL  GRANT  ' 

ON  THE 


CURRENCY. 


u Fling  but  a Stone ? the  Giant  Dies!” 


B O S T O N : 

WRIGHT  & POTTER,  PRINTERS,  79  MILK  STREET,  (COR.  OF  FEDERAL.) 

1869. 


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Somerville,  Mass,,  February  1,  1869. 

To  General  Ulysses  S.  Grant,  Washington , X).  C. 

As  President  elect  of  the  United  States,  it  will  soon  become 
your  prerogative  and  duty,  as  the  executive  head  of  the  nation, 
to  recommend  to  the  legislative  branch  of  the  government  the 
enactment  of  such  laws  as  seem  to  be  required  by  the  present 
condition  of  public  affairs. 

The  Congress  now  in  session  is  paralyzed  by  the  magnitude  and 
importance  of  matters  presented  for  its  determination,  and  in  a 
critical  condition  of  the  exchanges,  revenue  and  industry  of  the 
country,  composedly  talks  of  “ masterly  inactivity,” — an  idea  born 
of  treason, — in  expectation  that  the  ship  of  state  will  drift  into  a less 
troubled  sea.  An  absence  of  stout  determination  on  the  part  of 
this  body  is  likely  to  devolve  upon  you  the  necessity  of  presenting 
for  the  consideration  of  another  Congress  the  urgent  wants  of  the 
nation. 

As  one  of  more  than  thirty  millions,  whose  interests,  pursuits 
and  influence  are  less  potent  in  shaping  legislation  than  are  the 
persistent,  concerted  and  intelligent  efforts  of  a smaller  class  of 
the  population, — embracing  merchants,  bankers,  tradesmen  and 
speculators,  as  well  as  public  plunderers, — I think  it  not  improper 
to  offer  some  suggestions  on  the  most  important  topic  now  before 
the  people's  representatives, — that  of  the  measures  necessary  to 
restore  the  currency  of  the  country  to  an  equality  with  the  money 
of  the  world. 

No  philosophical  disquisition  on  the  power  of  money,  the  rela- 
tion of  capital  to  labor,  or  of  money  to  capital,  can  promote  the 
payment  of  debts  ; nor  will  it  strengthen  your  well-known  prac- 
tical appreciation  of  existing  evils,  or  aid  in  providing  a remedy 
therefor.  It  cannot,  however,  bo  impertinent,  in  considering  the 
manner  whereby  the  present  Condition  of  affairs  may  be  improved, 


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4 


to  refer  to  the  causes  which  have  produced  the  difficulties  under 
which  we  are  laboring. 

Within  the  last  eight  years,  the  nation  has  consumed,  in  an 
expensive  war, — inevitable,  and  worth  to  this  and  to  subsequent 
generations,  whatever  it  may  have  cost, — more  that  17,000,000,000 
of  the  results  of  labor, — the  past  and  future  earnings  of  its 
people. 

A portion  of  this  enormous  sum, — that  'represented  by  waste 
and  destruction  in  one  section  of  the  country, — has  been  yielded 
up,  a penalty  for  crime ; a portion  has  been  satisfied  by  the  people 
from  their  more  recent  earnings  ; and  there  remains  for  the 
industry  of  the  population  to  provide  for  hereafter,  not  less  than 
12,500,000,000. 

The  agent  of  the  nation,  its  government,  has  become  sponsor 
for  future  payments,  and  $400,000,000  of  the  amount  it  promises 
to  pay  on  demand.  This  alone  of  its  promises  it  fails  to  perform, 
and  thus  impairs  its  credit  not  only  with  its  own  people,  but  in 
every  foreign  land.  Until  this,  its  foremost  pledge,  shall  be 
redeemed,  a further  use  of  the  credit  of  the  nation  must  prove 
imprudent,  expensive  and  unwise ; for  when  the  ability  and 
determination  to  pay  this  portion  of  the  debt  is  manifested,  as  it 
can  only  be  manifested,  by  the  act  of  payment,  loans  sufficient  to 
consolidate  the  entire  indebtedness  may  be  obtained  on  terms  so 
favorable  as  to  relieve  the  people  of  one-lialf  the  burden.  To 
bring  about  such  a result  will  certainly  justify  every  necessary 
present  sacrifice.  Payment  of  these  unredeemed  obligations, 
upon  which  hinge  the  credit,  the  character  and  the  welfare  of  the 
population,  may  be  made  in  the  manner  indicated  hereafter,  per- 
mitting a joint  influence  of  contraction  and  commercial  growth 
to  operate  in  the  means  to  secure  a permanent  specie  currency. 

A dread  of  contraction  has  heretofore  stood  in  the  way  of 
adopting  a clear,  resolute  and  unchangeable  method  of  payment, 
without  which  confidence  can  nowhere  exist,  and  under  such  a 
dread  the  country  may  flounder  about  until  the  industry  and 
economic  habits  of  its  people  have  suffered  a loss  greater  than  the 
aggregate  of  the  present  national  debt. 

A judicious  contraction  of  the  currency  cannot  lessen  the  pur- 
chasing power  of  what  remains  in  circulation,  but  a disturbance 
to  some  extent  of  all  values  must  take  place  whenever  or  however 


D 


a return  to  gold  and  silver  payments  is  brought  about.  The 
sooner  this  disturbance  is  ended,  the  better  for  the  whole  people. 

Assuming  that  the  present  circulating  medium  reaches  the 
nominal  sum  of  $700,000,000,  of  the  value  of  74  cents  each,  how 
much  more  useful  in  commerce  can  this  be  than  $500,000,000 
worth  100  cents  each  ? 

Should  a far-reaching  policy  be  inaugurated,  looking  to  the 
ultimate  and  certain  payment  of  legal  tenders  in  gold,  and  under 
which  $100,000,000  shall  have  been  redeemed,  will  not  those  out- 
standing be  likely  to  rise  to  the  value  of  87  cents  ? And  before 
another  $100,000,000  shall  have  thus  been  paid,  will  not  the 
balance  be  appreciated  to  par?  Various  circumstances  will 
co-operate  to  this  end,  and  the  inconvenience  to  commercial 
operations  will  arise  from  efforts  of  the  banks  to  fortify  themselves 
with  lawful  money,  which  the  best  interests  of  the  country  and 
all  its  people  demand. 

If  legislation  be  wise,  the  banks  can  be  made  stronger  as  well 
as  more  useful  by  restraining  their  business  to  legitimate  and 
proper  channels,  enabling  them  to  furnish  a currency  medium 
more  than  sufficient  for  all  the  demands  of  honest  commercial 
and  industrial  pursuits. 

While  a manly,  straightforward,  creditable  and  statesmanlike 
policy  suggests  a commencement  of  the  payment  of  legal  tender 
notes  by  the  government  at  once,  which  can  be  done  by  hypothe- 
cating,— not  selling, — four  per  cent,  bonds  in  Europe,  there  is  a 
more  comfortable  method, — too  slow,  perhaps,  for  the  highest 
integrity  to  sanction, — one  that  is  safe,  certain,  simple  and  effica- 
cious, conclusively  meeting  all  the  objections  of  the  most  timid,  and 
which  will,  for  its  absolute  and  complete  success,  require  only 
steadfastness  and  unchangeableness  on  the  part  of  Congress.  This 
method  may  require  for  a few  years  a small  amount  of  gold  be- 
yond the  current  receipts  ; but  if,  for  a purpose  so  important,  the 
nation  is  unwilling  or  unable  to  curtail  its  annual  expenses,  its 
bankruptcy  ought  to  be  proclaimed,  so  that  its  creditors  may  un- 
derstand their  real  position.  A longer  use  of  irredeemable  paper 
money  is  bankruptcy,  and  taints  every  outstanding  obligation  of 
the  nation  and  all  other  public  American  securities.  When  the 
power  of  the  government  of  the  United  States  extends  over  the 
whole  earth,  and  not  till  then,  can  a symbolic  currency  without 
intrinsic  value  be  made  to  meet  the  wants  of  trade  ; but  where, 


6 


as  here,  a small  fraction  of  the  commerce  of  the  world  is  car- 
ried on,  the  emblems  of  labor  and  of  wealth  must  be  bone  and 
sinew,  gold  and  silver. 

To  overcome  our  present  difficulties,  I propose  that  method 
which  an  honest  and  right-minded  business  man  would  adopt, 
should  he  find  his  ability  to  meet  his  pecuniary  obligations  tem- 
porarily deranged.  Such  a man  would  divide  his  liabilities  into 
convenient  and  manageable  instalments,  and  fix  upon  the  earliest 
future  dates,  consistent  with  safety,  for  their  extinguishment. 

Provision  for  such  a payment  of  the  failed  paper  of  the  nation 
can  be  brought  about  by  authorizing  the  issue  of  bonds  payable 
in  instalments  in  gold,  without  interest , in  two,  three,  four,  five, 
six,  seven  years,  or  longer,  limiting  the  amount  to  become  due 
in  any  one  year  to  thirty,  forty  or  fifty  millions  of  dollars,  and 
receiving  in  exchange  therefor  legal  tender  notes,  which  should 
be  cancelled  and  destroyed.  One  section  of  an  act  will  cover  all 
necessary  legislation  on  the  currency  until  after  resumption  of 
specie  payments  is  complete , and  this,  in  combination  with  an  Act 
legalizing  contracts  in  coin,  and  a declaration  that  our  debt  is  to 
be  paid  in  specie,  will  improve  the  credit  of  the  nation  where  it 
is  most  needed, — in  every  bank  parlor  of  the  old  world, — thus 
paving  the  way  to  future  financial  health.  The  date  of  the  bonds 
first  becoming  due  may  be  so  arranged  that  their  present 
marketable  value  will  be  less  than  that  of  greenbacks,  and 
not  being  wanted,  they  would  remain  in  the  treasury.  This 
method  can  be  so  graduated  by  any  merchant’s  clerk  that 
resumption  may  be  brought  about  speedily,  or  may  be  deferred 
five,  ten  or  twenty  years.  If,  as  an  example,  810,000,000  of 
bonds  per  annum,  without  interest,  should  be  authorized,  the 
first  to  be  paid  in  five  years,  it  would  be  a long  period  before 
greenbacks  would  become  as  valuable  as  gold ; but  if  instalments 
of  850,000,000  were  adopted,  the  first  payment  to  be  made  in  two 
years,  it  is  probable  that  paper  money  and  gold  would  be  on  an 
equality  within  five  years.  This  plan  would  enable  the  average 
opinion  of  Congress  to  concentrate  upon  some  date  and  amount, 
as  a groundwork  for  the  people  in  all  future  business  operations. 
As  gradually  these  bonds  appreciate,  and  as  time  rolls  on  they 
must  appreciate,  exchanges  will  commence.  Left  to  the  volun- 
tary action  of  the  people,  they  will  be  taken  only  when  they  are 
esteemed  of  greater  value  than  legal  tender  notes,  and  as  this 


7 


time  must  come,  sooner  or  later,  the  process  of  conversion  will 
move  on  without  obstruction.  The  effect  will  be  obvious.  At 
first  worth  but  70  cents,  they  become  in  time  worth  75,  80,  90, 
and  at  the  time  of  payment  100  cents  in  gold.  Meantime  a sec- 
ond and  a third  instalment  of  these  bonds  are  being  purchased, 
and  an  appreciation  of  the  whole  mass  of  legal  tenders  and  bank 
notes  has  commenced.  This  appreciation  would  undoubtedly 
nearly  correspond  with  the  depreciation  of  the  volume  of  paper 
money,  so  that  from  this  cause  alone \ no  contraction  of  the  pur- 
chasing power  of  the  currency  would  take  place.  A better  dollar 
would  buy  more  goods,  just  as  it  does  now,  and  will  always. 
There  is  more  likely  to  be  a slight  inflation,  consequent  upon  the 
increased  value  of  greenbacks,  brought  about  by  such  a rigid 
determination  of  the  nation  to  pay  its  debts. 

While  this  process  is  going  on,  the  people  will  more  frequently 
than  hitherto  exercise  their  right  to  the  redemption  of  bills  issued 
by  the  national  banks,  absorbing  legal  tenders  to  an  extent  which 
will  compel  the  banks  to  provide  themselves  with  coin,  the  only 
lawful  money  within  their  reach  ; and  it  is  probable  that  resump- 
tion would  commence  long  before  $200,000,000  of  the  bonds 
issued  to  facilitate  this  purpose  had  matured,  and  being  without 
interest,  all  further  demand  for  them  would  cease. 

Our  contracts  hitherto  have  been  to  pay  in  dollars  recognized 
as  the  money  of  the  world.  A policy  resulting  in  the  payment  of 
one  instalment  of  $50,000,000  of  the  principal  of  the  legal  tender 
debt  would  be  a most  complete  financial  success,  should  it  raise 
the  price  of  our  bonds  (now  selling  in  London  at  76,)  to  91, 
equal  here  to  100  cents  in  gold,  by  establishing  our  credit  abroad, 
thus  leading  to  a speedy  equalization  in  value  here  of  paper 
money  and  gold. 

Through  this  period,  the  directors  of  more  than  sixteen  hun- 
dred banks,  intelligent  and  sagacious  business  men,  would  take 
measures  to  insure  the  ability  of  their  several  institutions  to  re- 
spond to  the  demands  for  redemption  made  upon  them,  and  such 
as  failed  to  provide  for  this  would  necessarily  be  closed  by  author- 
ity of  law.  At  whatever  cost,  the  banks  must  thus  prepare,  and 
this  will  be  no  hardship,  when  the  great  profits  of  their  business 
for  the  last  few  yesfrs,  and  upon  the  sale  of  coin  formerly  held  by 
them,  is  taken  into  view. 


8 


Hereafter  the  people  should  enjoy  a more  equitable  proportion 
of  the  value  of  the  circulating  notes  issued  to  the  banks,  by  in- 
creasing the  tax  thereon  ; and  the  right  to  engage  in  the  business 
of  national  banking  should  be  extended  to  localities  now  destitute 
of  proper  facilities  of  this  kind. 

A striking  feature  in  legislation  is  the  care  taken  to  protect  the 
banks  from  inconvenience  or  loss  of  interest.  This  is  all  unneces- 
sary and  wrong,  and  indicates  how  far  these  institutions  have 
already  vitiated  the  public  mind.  Congress  enacted  laws  under 
which  more  than  sixteen  hundred  banking  [associations,  with  an 
average  capital  of  a quarter  of  a million  of  dollars,  have  been 
organized.  Besides  paying  dividends  amounting  to  ten  per  cent, 
per  annum, — a much  larger  rate  than  the  industry  of  the  country 
could  ever  afford, — these  associations  have  in  four  years  accumu- 
lated a surplus  of  a hundred  millions  of  dollars.  Let,  then,  such 
institutions  provide  for  themselves  within  the  limits  of  the  most 
stringent  laws.  They  are  managed  by  more  than  sixteen  hun- 
dred boards  of  directors,  comprising  the  most  able  business  minds 
in  the  country,  who,  when  compelled  by  some  action  of  Congress 
directed  to  restoring  the  credit  of  the  government,  will  astonish 
the  members  of  the  national  legislature  by  the  skilful  manage- 
ment of  their  own  affairs.  Their  future  profits,  ground  out  of 
the  industry  of  the  people,  may  and  should  be  greatly  reduced, 
and  after  having  sold  their  coin  at  an  advance  averaging  nearly  a 
hundred  per  cent.,  they  cannot  ask  to  be  relieved  from  restoring 
it  to  their  vaults  at  a much  lower  rate.  If,  in  consequence  of  a 
scarcity  of  legal  tender  notes,  any  bank  is  found  unable  to  redeem 
its  circulation  in  lawful  money,  let  it  go  to  the  wall.  Ten  appli- 
cants for  the  lost  privileges  will  immediately  appear  from  sections 
of  the  country  unprovided  with  proper  facilities.  It  is  the  busi- 
ness of  the  banks  to  strengthen  their  own  position,  and  it  is  the 
duty  of  Congress  to  protect  the  people  from  loss  by  the  circula- 
tion of  paper  money,  which,  when  inconvertible,  has  proved  the 
most  ingenious  device  ever  contrived  to  rob  the  poor  man  of  his 
just  share  in  the  product  of  labor. 

Intimately  connected  with  the  question  of  currency  are  other 
subjects, — the  national  debt,  revenue  system,  tariff,  public  lands, 
internal  improvements, — all,  as  they  may  be  wisely  or  thriftlessly 
managed,  affecting  the  industry  of  the  country,  upon  which  de- 
pends success  in  developing  a “ government  of  the  people  for  the 


9 


people  ; ” but  the  brief  limits  assigned  to  this  communication 
admit  of  but  a few  suggestions  on  these  topics. 

The  high  rates  of  interest  paid  by  the  nation,  compel  nearly  all 
classes  of  its  population  to  consent  to  rates  far  beyond  the  ability 
of  any  people  through  a long  series  of  years  to  sustain  by  their 
labor.  It  is  a duty,  therefore,  of  the  government  to  make  any 
temporary  sacrifice,  if  by  doing  this  the  credit  of  the  nation  can 
be  so  established  as  to  enable  it  to  contract  loans  in  competition 
with  the  most  favored  countries. 

With  a government  which  no  earthly  power  can  shake, — having 
crushed  a rebellion  which  must  have  annihilated  any  other  system, 
— destined  to  live  long  after  the  monarchies  of  Europe  have  dis- 
appeared, their  debts  and  their  debtors  alike  crumbled  to  atoms, 
it  is  mortifying  to  find  our  obligations  demanding  a rate  of  inter- 
est nearly  three  times  that  of  Great  Britain.  In  the  money  mar- 
kets of  Europe  more  confidence  is  awarded  to  the  securities  of 
effete  Turkey  and  half-civilized  Brazil.  This  discredit  will  con- 
tinue so  long  as  Congress  confines  itself  to  resolutions  and  speeches 
touching  the  payment  of  the  debts  of  the  nation.  To  give  confi- 
dence to  the  world  some  deed  must  be  done,  some  payment  of 
principal  must  be  made  in  coin,  under  authority  of  unchanging 
and  unchangeable  laws. 

To  develop  the  resources  of  the  nation,  encourage  its  industry, 
— the  source  of  wealth, — economize  its  revenues,  reduce  its  ex- 
penses, and  consolidate  its  debts  at  a low  rate  of  interest,  demand 
the  daily  and  hourly  attention  of  ail  public  officers.  We  must 
be  taught  to  earn  money,  husband  it,  invest  it,  and  made  to  realize 
that  the  safest  investment  is  in  the  payment  of  debts.  That 
representative  of  the  people  who  shall  successfully  discharge  his 
duty  in  this  direction  will  earn  for  himself  the  gratitude  of  mil- 
lions of  his  fellow  citizens,  and  the  just  approval  of  the  good  and 
wise  in  other  lands.  If,  however,  the  will  and  the  genius  are 
wanting,  the  country  can  work  out  with  much  suffering  its  own 
salvation,  in  defiance  of  legislative  ignorance  and  neglect. 

With  resources  unequalled,  the  nation  which  has  sacrificed 
hundreds  of  thousands  of  its  able-bodied  citizens,  and  thousands 
of  millions  of  its  wealth,  to  prevent  a disintegration  of  its  terri- 
tory, is  being  disgraced  and  impoverished  by  tardiness  in  the  adop- 
tion of  measures  necessary  to  establish  its  credit,  notwithstanding 


2 


10 


the  requisite  measures  are  sure  to  prove  alike  honest  and  econo- 
mical. 

A sinking  fund  of  but-thirteen  cents  per  annum  for  each  of  the 
present  population,  compounded  at  six  per  cent.,  will  pay  the 
principal  of  the  public  debt  in  little  more  than  fifty  years. 
Waste,  fraud,  or  extravagance,  to  the  same  small  extent,  will 
double  the  debt  in  the  same  number  of  years.  Is  not  this  a suf- 
ficient motive  for  economy  ? 

If  excessive  taxation  does  not  retard  emigration,  the  ordinary  in- 
crease of  population  will  gradually  reduce  the  per  capita  expenses 
of  the  government,  amounting  now  to  eight  dollars  per  annum, 
so  that  in  little  more  than  twenty  years  this  burden  will  be  but 
half  as  great.  Wise  legislation,  and  an  honest  execution  of  the 
laws,  can  save,  meantime,  for  the  larger  portion  of  the  inhabitants 
of  the  land,  the  price  of  some  necessity  or  comfort. 

A very  large  and  the  most  valuable  portion  of  the  public 
domain, — pledged  as  it  is  for  the  payment  of  our  debts, — 
has  been  frittered  away,  but  what  remains  might,  if  placed 
under  the  absolute  control  of  trustees  selected  for  this  especial 
purpose,  be  made  in  time  to  pay  the  principal  of  the  national 
debt.  Legislation  on  this  matter  seems  heretofore  to  have  been 
controlled  by  money  rather  than  reason.  This  also  has  been  the 
case  on  questions  relating  to  the  tariff,  which  have  been  deter- 
mined by  fancies  and  guesses,  and  vague  opinions  of  interested 
parties,  so  that  no  scientific  basis  for  legislation  has  been  sought 
for  or  deemed  necessary. 

Notwithstanding  the  audacious  criminality  of  an  attempt  to 
dismember  the  government,  the  time  for  the  gallows  has  passed, 
and  an  unqualified  forgiveness  of  errors  will  do  much  to  restore 
to  the  South  the  ability  to  aid  in  our  redemption  from  financial 
difficulties.  When  peace  shall  be  fully  appreciated  in  that  section 
of  the  country,  its  industry  will  certainly  furnish  the  sheet  anchor 
of  our  safety,  as  California  once  saved  from  utter  bankruptcy  the 
people  of  the  Eastern  States. 

These  are  matters  of  too  great  importance  to  the  industrial 
classes  to  be  neglected.  If  not  properly  cared  for,  the  will  of  the 
people  must,  at  no  distant  period,  manifest  itself,  at  any  cost  to 
themselves,  to  the  banks,  or  any  other  special  interests.  The 
operations  of  thieves  and  plunderers  in  the  moneyed  metropolis 


11 


of  the  nation  has  taught  the  simple  lesson  that  an  average  of  only 
five  dollars  of  legal  tender  notes  suddenly  locked  up  in  the  pockets 
of  forty  millions  of  people  will  destroy  all  industry,  and  render 
insolvent  every  bank  in  the  country. 

In  selecting  a head  for  that  department  which  should  give  sys- 
tem, regularity  and  economy  to  the  revenue  and  finances  of  the 
nation,  cast  your  vision  over  the  whole  horizon,  and  haply  there 
may  be  found,  beyond  a towering  legion  of  political  charlatans, 
some  captain  of  artillery,  the  counterpart  of  that  Secretary  of  the 
Treasury  who  co-operated  so  skilfully  in  the  organization  of  our 
present  form  of  government,  and  of  whom— although  appointed 
by  Washington  when  little  more  than  thirty  years  of  age — it  has 
been  said,  “ Ho  smote  the  rock  of  the  national  resources,  and 
abundant  streams  of  revenue  gushed  forth  ; he  touched  the  dead 
corpse  of  public  credit,  and  it  sprang  upon  its  feet.” 

Very  respectfully, 

Your  obedient  servant, 

JAMES  M.  SHUTE. 


